The External Finance Premium and the Financial Accelerator: The Case of Turkey

Birgül Cambazoğlu () and Hacer Simay Karaalp ()
Additional contact information
Birgül Cambazoğlu: Haliç University, Department of Banking and Insurance, 34000, Istanbul, Turkey
Hacer Simay Karaalp: Pamukkale University, Faculty of Economics and Administrative Sciences, 20070, Denizli, Turkey

International Journal of Business and Economic Sciences Applied Research (IJBESAR), 2013, vol. 6, issue 1, 103-121

Abstract: The monetary transmission mechanisms have influence on saving and investment decisions of firms and households by affecting their balance sheets. This study examines the effects of monetary policy through the balance sheet channel (also known as 'financial accelerator'), which affects net worth, liquidity and spending of firms and households through external finance premium. The aim of this study is to analyze the effect of monetary contraction which raised the external finance premium and thus the effect of the increase in the external finance premium which diminishes output for Turkey over the period of 2003:01-2010:08 by using VAR (vector autoregressive models), impulse-response analysis and forecast error variance decomposition. The results indicate that contractionary monetary policy shock, which led to increased external finance premium, negatively affected the manufacturing sector and decreased total output. In other words, the monetary shock negatively affected firms' balance sheets in the short-run.

Keywords: Financial Accelerator; External Finance Premium; Turkey (search for similar items in EconPapers)
JEL-codes: C32 E44 E52 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://ijbesar.af.duth.gr/docs/volume6_issue1/external_finance_premium.pdf (application/pdf)
https://ijbesar.af.duth.gr/volume6_issue1.php (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:tei:journl:v:6:y:2013:i:1:p:103-121

Access Statistics for this article

International Journal of Business and Economic Sciences Applied Research (IJBESAR) is currently edited by Christos Grose and Persefoni Polychronidou

More articles in International Journal of Business and Economic Sciences Applied Research (IJBESAR) from Democritus University of Thrace (DUTH), Kavala Campus, Greece Contact information at EDIRC.
Bibliographic data for series maintained by Kostas Stergidis ().